It will be the sixth consecutive year that opium production has increased, despite hundreds of millions of dollars given to programmes to halt cultivation, processing and trafficking.

The country is producing nearly 95 per cent of the world's opium, up from 92 per cent in 2006, according to Reuters.

Christina Oguz, the head of the UN Office on Drugs and Crime (UNODC) in Afghanistan told the news agency: "It is a very bad situation definitely, and the government has not been able to deal with it in the right way."

"The same goes for the international community."

Heroin trafficking

Opium and the heroin made from it are estimated to be worth some $3 billion to the Afghan economy, about a third of its gross domestic product.

The heroin is trafficked into many Western countries.

"It is a very bad situation definitely, and the government has not been able to deal with it in the right way."Christina Oguz, head of the UN Office on Drugs and Crime (UNODC) in Afghanistan

Afghanistan is locked in a circle where government officials are said to be involved in the drug trade, the report is set to say.

However, the Afghan counter-narcotics ministry says that it does not have enough evidence to hold corrupt officials accountable.

State control over parts of the country has weakened which in turn leads to rising insecurity and more drug production.

In 2001, the Taliban had managed to reduce poppy crops, where the opium is extracted, and enforced strict punishments for those growing them.

But about 70 per cent of opium production now comes from provinces in the south where Taliban fighters continue to launch attacks.

According to Afghan and foreign officials, both drug traffickers and the Taliban have a common interest in instability and lawlessness.

'Money in the bank'

Zalmay Afzaly, a counter-narcotics ministry spokesman said: "Traffickers are equipping and providing funds for terrorist organisations that are responsible for many attacks in Kabul, other parts of the country and other parts of the world."

Insecurity is also said to lead to farmers planting poppies, as fighting can prevent them from getting perishable crops to market.

A senior Western diplomat said: "The great thing about opium is that it lasts for 20 to 30 years - it's money in the bank."

"So if you're not sure you can get your onions or carrots to market as they may go off because it's too insecure to move, then you grow opium and put it under your bed - it's a currency."

The United States had campaigned for the use of aerial spraying to eradicate poppy crops, but the idea was rejected due to objections from the Afghan government, worried about an adverse public reaction.

Financial incentives

James Bays, Al Jazeera's correspondent in Afghanistan, said that if crops are destroyed, farmers may also stop co-operating with the central government in Kabul.

Farmers say they need to grow poppies to survive [GALLO/GETTY]

Washington is putting forward a strategy under which Afghan provincial governors will be given greater financial incentives to combat drugs while increasing co-ordination between counter-narcotics forces and the military.

The US has given $200 million in aid this year to Helmand, the biggest opium-producing province.

If Helmand were a country, it would be the fifth biggest recipient of US aid, diplomats say.

But Oguz said: "They use it for growing opium. This is telling the rest of the country 'grow opium and we'll give you a lot of rewards, we'll give you aid'."

'Our children will die'

The strip of land along the banks of the Helmand river is one of the most fertile farming areas in Afghanistan and was once the country's bread-basket.